The Inland Revenue has accused the British film industry ofabusing government aid, with every production of recent years deliberatelyover-claiming tax relief - according to a report in today's FinancialTimes.
Revenue officials called in about 20 members of the filmindustry and warned them of severe consequences if the'exploitation' of tax-relief schemes did not immediately stop, saidthe paper.
The Revenue said the industry was exploiting rules on taxrelief by 'double-dipping', that is, by claiming relief more thanonce against a single piece of expenditure. While not illegal, the Revenuesaid, the industry was 'not playing fair'. It said double-dippingwas 'against the spirit' of legislation designed to encourageinvestment in the British film industry.
The Revenue said the practice of double-dipping was'virtually universal', with 'every qualifying film it hadseen financed on the basis of double-dipping'. It warned it would'take all steps to counter such abuse including, where necessary,advising ministers on introducing legislation to put matters beyonddoubt'.
'Both the Revenue and the government are becomingincreasingly exasperated at the extent to which some parts of the industry areexploiting the film reliefs,' the Revenue told The Financial Times. 'The government remains committed toencouraging film production in the UK through use of the reliefs in the way inwhich the legislation allows - but this does not extend to deliberateexploitation of those reliefs.'